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Agreement to make recommended offer to acquire all common shares in Anvil Mining Limited
Agreement to make recommended offer to acquire all common shares in Anvil Mining Limited
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Disclaimer
The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part, for any purpose. No representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of Minmetals Resources Limited‘s (“MMR”) financial or trading position or prospects. The information contained in this presentation should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date of the presentation. The information in this presentation concerning Anvil and Anvil’s assets and projects is based on publicly available information. None of MMR and its affiliates, advisors and representatives shall have any liability whatsoever (in negligence or otherwise) for any loss or damage howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.
This presentation includes forward-looking statements. Forward-looking statements include, but are not limited to, the company’s growth potential, costs projections, expected infrastructure development, capital cost expenditures, market outlook and other statements that are not historical facts. When used in this presentation, the words such as "could“, “plan," "estimate," "expect," "intend”, “propose”, "may“, “will”, "potential“, "should“, and similar expressions are forward-looking statements. Although MMR believes that the expectations reflected in these forward-looking statements are reasonable, such statements involve known and unknown risks, uncertainties and other factors, certain of which are beyond MMR's control, that may cause the actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance or achievement. These risks, uncertainties and other factors include, but are not limited to: general business and economic conditions globally or in certain jurisdictions; the failure to meet certain conditions of the Offer; the timing and receipt of governmental approvals necessary to complete the Offer and any related transactions; legislative and/or regulatory changes; the behaviour of other market participants; fluctuations in the price of copper and other commodities; fluctuations in currency exchange rates; MMR's ability to integrate acquisitions; operating or technical difficulties in connection with development or mining activities; the speculative nature of exploration and development, including the risks of obtaining the necessary permits and licenses; risks and hazards associated with the business of exploration, development and mining; availability and cost of inputs; availability and cost of shipping; risks of maintaining licences and approvals; changes in the tax rates or introduction of new taxes. No assurance can be given that such forward-looking statements will prove to have been correct. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. MMR disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable laws.
This presentation is for information purposes only and does not constitute an offer or invitation to purchase or subscribe for, or a solicitation of an offer to sell, any securities in the United States or any other jurisdiction and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto, nor does this presentation constitute a recommendation regarding MMR’s securities. This presentation is not for distribution in the United States. Securities may not be offered or sold in the United States absent registration or exemption from registration under the US Securities Act of 1933, as amended. There will be no public offering of MMR’s securities in the United States.
The Offer has not yet been commenced. This presentation is for information purposes only. The Offer (as the same may be varied or extended in accordance with applicable law) will be made exclusively by means of, and subject to the terms and conditions set out in, the offer and circular, which will be delivered to Anvil, filed with Canadian provincial securities regulators and the Australian Securities Exchange and mailed to Anvil’s shareholders by MMR. The offer and circular will contain important information about the Offer, including the terms and conditions of the Offer, and should be read carefully by Anvil shareholders.
The Offer will not be made in, nor will deposits of Anvil shares be accepted in, any jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such jurisdiction. However, MMR may, in its sole discretion, take such action as it deems necessary to extend the Offer in any such jurisdiction.
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Offer highlights
Anvil shareholders realise compelling value § All cash offer of C$8.00 per share provides certainty in volatile markets § 30% premium based on Anvil’s 20 day trading VWAP on the TSX up to September 29, 2011 § Total offer value approximately C$1,330 million Support and lock up agreements § Anvil directors unanimously recommend MMR’s offer § 40% of Anvil shares locked up (on a fully diluted basis) § C$53.2m break fee, non solicitation covenant and right to match superior offer Attractive investment for MMR shareholders § Expands MMR copper output circa 60%, material uplift in MMR copper reserves, high margin
addition § Expected to have positive cash flow and earnings per share § Excellent strategic fit with MMR’s aim of building an international upstream base metals
company § Anvil provides an excellent platform and experience to further expand into the central African
copper belt and Southern Africa
Anvil overview
Assets 1. Kinsevere Mine (DRC) (95%)
– 60ktpa cathode copper
– Commissioning and ramp up
2. Mutoshi Project (DRC) (70%)
– Copper and cobalt exploration project
– 33,000m drilling program underway
– Potential for large scale open pit operation
3. Equity in Mawson West (14.5%)
– DRC exploration projects
Corporate Situation § TSX Primary Listing with ASX Secondary (<10% held has CDIs)
§ Net debt $32M at 31 July 2011, to be repaid
157,972,886 Outstanding common shares
3,094,334 In-the-Money Options
5,228,320 Warrants ($2.75 Trafigura)
166,295,540 Diluted Basis
Map of Kinsevere mine site and snapshot of operation!
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Kinsevere Owner : Anvil Mining 95%
Mining Company of Katanga (MCK) 5%
25+ year lease agreement with Gecamines
Location : 30km north of Lubumbashi
Product : Copper Cathode
Status : Currently commissioning SX-EW (Kinsevere Stage II)
Life : 14 years (oxides)
Mining: Open pit (3 sequential pits)
Production : 60ktpa Cu cathode nameplate
Summary of Resources as at 31 December 2010
0.5% Cut Off Grade Tonnes (Mt)
TCu (%) ASCu (%)
Co (%)
Contained TCu (Mt)
Oxide
Measured + Indicated 29.0 3.60 2.85 0.16 1.043
Inferred 1.1 2.22 1.55 0.13 0.025
Total M + I + I 30.1 3.55 2.80 0.16 1.067
Sulphide
Measured + Indicated 11.9 2.67 1.09 0.14 0.317
Inferred 12.3 2.66 0.82 0.13 0.328
Total M + I + I 24.2 2.66 0.95 0.13 0.645
Key attributes • High grade copper oxide resource • Well executed, shallow mining operation • Simple processing through standard, well built SX-EW plant • Life of mine off take in place • Experienced operating team in place • Plans to review sulphide potential • Sound relationships with key DRC stakeholders
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Summary of the Proposed Offer MMR has entered a support agreement with Anvil to make a compelling all cash takeover offer to Anvil shareholders
Financing § Finance in place through a combination of existing cash reserves and finance facility from major shareholder China Minmetals Nonferrous Co., Limited
Key Offer Conditions
§ Minimum acceptance condition: two-thirds of outstanding Anvil shares § MMR shareholder approval required § Other conditions and regulatory approvals (including approval under the Australian
Foreign Acquisitions and Takeovers Act)
Proposed Offer § All cash offer of C$8.00 per Anvil Mining Limited share
Expected key dates
§ Mid-late Oct 2011: Canadian offer and bid circular dispatched § Mid Nov 2011: HKSE circular dispatched § Late Nov 2011: Offer closes unless extended
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Why Anvil shareholders should accept the Offer The Proposed Offer provides compelling value to Anvil shareholders
ü All cash Offer of C$8.00 per share ü Substantial premium ü Certainty of value in an uncertain
environment ü Certainty of timing in realising
investment ü Removal of future development risk ü Recommended by Anvil board ü 40% of Anvil shares already committed
under lock up agreement
C$8.00
C$6.15
Proposed Offer value 20 trading day VWAP
30% premium
Offer represents a substantial premium for Anvil shares
Note: Anvil 20 trading day VWAP to 29 Sep 2011 on the TSX. Source: Bloomberg
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Attractive investment for MMR shareholders
MMR’s acquisition rationale
1 Excellent fit with MMR’s strategy to grow its upstream base metals business
2 Attractive copper market fundamentals
3 Expands MMR copper output, material uplift in MMR copper reserves, high margin addition
4 MMR’s Sepon experience will assist in full ramp up of Kinsevere mine
5 Provides MMR with platform and experience to grow in Southern Africa
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Attractive investment for MMR shareholders
Geographic expansion
1 Excellent fit with MMR’s strategy to grow its upstream base metals business
O!
100% !Izok!Lake!Copper, zinc, !lead, silver!
100% High Lake!Copper,!zinc, !lead, silver!
100% Rosebery!Zinc, copper, lead, !gold, silver!
100% Golden Grove!Zinc, copper, lead, !gold, silver!
100% !Avebury!Nickel!
100% !Dugald!River!Zinc, lead, silver!
100% Century!Zinc, lead, silver!
90% !Sepon!Copper, gold!
D!D!
O!O!
D!
O!
S!O!O! Operating mine!Development!Suspended operation! MMR!
Anvil!
D!S!
Anvil!Copper, cobalt!
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Attractive investment for MMR shareholders
Excellent strategic fit
1 Excellent fit with MMR’s strategy to grow its upstream base metals business
MMR criteria Anvil
Commodities § Copper, zinc, lead, nickel, bauxite ü Pure copper asset
Geographies § Careful analysis of political and operational risk
ü DRC has acceptable political risk ü China has strong ties with DRC
Scale § Must be meaningful to MMR’s scale ü 60 ktpa copper output from 2012 ü FY12 EBITDA US$321m
Stage of development
§ Prefer producing assets § Can add value to early-stage assets
and expansions
ü Kinsevere ramping up production ü Mutoshi could add significant copper and
cobalt resource
Note: FY12 EBITDA is from consensus forecast of 6 brokers issuing research on Anvil Source: Anvil Company Info, brokers consensus
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Attractive investment for MMR shareholders
Forecast future supply imbalance bodes well for copper producers
2 Attractive copper market fundamentals
Global copper supply / demand balance
2020 potential demand and base case supply gap of 6.1Mt of copper
10,000
12,500
15,000
17,500
20,000
22,500
25,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Base case production capability Highly probable expansions Probable expansions Primary demand
Source: Brook Hunt (A Wood Mackenzie Company)!
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Attractive investment for MMR shareholders
Circa 60% increase in MMR’s exposure to copper
3 Expands MMR copper output
Note: Copper equivalent conversion based on spot metal prices at 28 September 2011 Source: 2012 MMR production estimates from the AMC Consultants Competent Person’s report on the Minerals and Metals Group contained in MMR’s circular dated 22 November 2010.
Pre-acquisition (FY12) Post-acquisition (FY12)
Expected FY12 copper equivalent production
Zinc49%
Copper33%
Lead5%
Gold9%
Silver4%
Zinc41%
Lead4%
Gold8%
Silver3%
Copper44%
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Attractive investment for MMR shareholders
Kinsevere’s attractive cost profile leads to profitable margin
3 High margin operation
Margin
Source: consensus forecast of 6 brokers issuing research on Anvil, consensus broker Cu forecast
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2011e 2012e 2013e 2014e 2015e-
10%
20%
30%
40%
50%
60%
70%
80%
90%
Cu price C1 cost Margin
USD/lb
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Attractive investment for MMR shareholders
3 Material uplift in copper reserves
Copper reserves
Anvil would increases MMR copper reserves by ~75%
0
0.5
1
1.5
2
MMR MMR + Anvil
Million tonnes
Source: MMR, Anvil 2010 reserve statements
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Attractive investment for MMR shareholders
4 MMR’s Sepon experience will assist in full ramp up of Kinsevere mine
MMR has a decade of experience in Kinsevere type operations
MMR’s Sepon Anvil’s Kinsevere
Geology High grade copper oxide ore ü High grade copper oxide ore
Mining Shallow open pit mining ü Shallow open pit mining – similar fleet
Processing Crushing, grinding SX-EW ü Crushing, grinding SX-EW – simpler circuit
Output 60ktpa copper expanded to 80ktpa ü 60ktpa copper cathode
Climate Tropical ü Tropical
Geography Land locked developing nation ü Land locked developing nation
Status 10+ years of successful operation ü Commissioning and ramping up
ZAMBIA!
NAMIBIA!
SOUTH AFRICA!
BOTSWANA!
Attractive investment for MMR shareholders
5 Provides MMR with platform and experience to grow in Southern Africa
Gold!
Platinum! Copper!
Nickel/Cobalt! Zinc/Lead! Uranium!
Iron Ore!
Silver!
Other!
Kibali!Mongbwalu!
Buhemba!
Mgusu!
Singida!
Namoya!
Saza!
Niassa!
Ghiloa!
Pumpi!Nama!
Cuvo River!
Eureka!
Manica!
Kabwe!
Bubi!Renco!
Kudu!
Ghanzi! Nigel!
Oryx!
Boseto!Kombat!
Haib!
Prieska!
Lily!
Witvlei!
Kobos!
Goudplaats!
Aurora!
DEMOCRATIC REPUBLIC OF
CONGO!(DRC)!CONGO!
GABON!
CAMEROON!
TANZANIA!
ANGOLA!
MOZAMBIQUE!
MADAGASCAR!
KENYA!UGANDA!
KINSEVERE!
KOV!
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• The 450km Katanga copper belt stretching across Zambia and into DRC contains more than a tenth of the world’s copper deposits, with grades above 2.0% Cu and significant cobalt by-products
• Numerous world class copper deposits have been discovered: KOV, Kamoto and more recently Tenke Fungurume
• There is enormous exploration potential as the region remains largely under explored.
• Anvil’s experience and relationships would be leveraged to further grow in in this region
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Key messages
§ Compelling all cash offer C$8.00 per share – a 30% premium to 20 Day VWAP on TSX to September 29, 2011, unanimously recommended by Anvil Board
§ 40% of Anvil shares committed under lock up agreement § Flagship Kinsevere mine would materially increase MMR’s copper exposure (60ktpa),
substantially boosts MMR’s copper reserves (+75%) and generates strong margins at current prices
§ Anvil has excellent alignment with MMG’s stated growth strategy in upstream, international base metals
§ Anvil’s track record in the DRC and established relationships provide an established footprint in the resource-rich DRC mineral belt which can be leveraged to deliver further growth
MMR’s “friendly” offer is compelling for Anvil shareholders and represents an attractive investment for MMR shareholders
Questions?
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